Patent Law Weblog

recent posts

about

  • iVenture Card Traveler Ltd v. Smart Destinations, Inc. (PTAB 2016)

    Patent Directed to Programmable Ticketing System Determined to be Eligible for Covered Business Method Patent Review

    By Joseph Herndon —

    USPTO SealPetitioner, iVenture Card Traveler Ltd, filed a Petition seeking to institute a covered business method patent review of all claims of U.S. Patent No. 7,765,128, owned by Smart Destinations, Inc.  The Board, applying the standard that requires demonstration that more likely than not Petitioner would prevail with respect to at least one challenged claim, the Board granted Petitioner's request to institute the CBM review.

    The '128 Patent

    The '128 patent is titled "Programmable Ticketing System."  The '128 patent describes a system and business model for allowing tourists access to a variety of attractions using a passcard.  The system may include reward terminals that are located at attractions and are configured to read smart cards presented to them and, assuming the card is valid for that location, allow the card holder to access the attraction.  Each smart card may be programmed with a product code that defines the attractions at which the card may be used.  Product codes may be stored in a central database along with a list of the attractions associated with each product code.  The list of attractions may be updated as desired, thereby updating and changing the attractions at which any given card may be used.

    The subject matter of the '128 patent is illustrated by Figure 2 of the patent, which is reproduced below:

    FIG. 2The reward terminals are configured as smart card readers.  Reward terminals are located at each partner attraction and can read cards presented to it to indicate whether or not a card-visitor has access to the attraction.  A database is updated over a network with nightly downloads to the terminals of any changes to products that use the attractions (and the cards that, therefore, allow access) and uploads to the database of actual use data.  A user interface allows a system manager to access the system network and run programs on gateway or store or retrieve data from database.  A central controller is used to calculate compensation for each attraction based on level of use, e.g., the compensation for allowing the bearer of each card access to the attraction.

    Thus, owners of cards have access to multiple attractions without having to pay separately for each attraction.  Rather, a person may simply pay once for a card and use that card to access attractions that are partners of the system.  Attractions may be paid by the system manager, at the end of a day, week, month, or other time frame, access fees corresponding to all the cards that have been used at that attraction during the time period.

    Claim 1 is representative and is reproduced below:

    1.  A manager system that permits access to a plurality of attractions, the system comprising:
        a network interface configured to:
            receive data corresponding to actual use of reward terminals to access respective attractions of the plurality of attractions for a time period, the reward terminals being located in proximity to the plurality of attractions, being configured to access the respective attractions using at least one product code, the data identifying at least one attraction; and
            provide at least one product definition to the reward terminals, the at least one product definition including associations between the at least one product code and the respective attractions, whereby a change in the associations between the at least one product code and the respective attractions changes the access to the respective attractions via the reward terminals using the at least one product code;
        a database to store the at least one product definition;
        a database to store the data corresponding to the actual use of the reward terminals to access the attractions; and
        a controller to calculate an aggregated compensation for each attraction based on the actual use of the reward terminals to access the respective attraction by a plurality of users, wherein the controller does not compensate the attractions based on the actual use of the reward terminals at a time of the actual use of the reward terminals via a card.

    Standing-Financial Product or Service

    A covered business method patent is "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service."  AIA § 18(d)(1).

    This prong was easily met since all independent claims cover methods or systems for calculating aggregated compensation.

    Standing-Technological Invention Exception

    The AIA excludes from covered business method patent review patents for a "technological invention."  AIA § 18(d)(1).  To determine whether a patent is for a "technological invention," the Board considers whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.

    Petitioner argued that all of the claim elements of the '128 patent were known in the prior art, and specifically that everything illustrated in Figure 2 of the '128 Patent, and described in the accompanying text, was conventional technology used in conventional ways before the asserted priority date.  The Petitioner further relied on testimony from its expert to demonstrate that each of the steps of each of the method claims and each of the elements of each of the system claims are present in the prior art.

    The Board agreed, and found that the '128 patent is directed to a business problem, in contrast to a solution to a technical problem.  Among other reasons, the '128 patent itself describes the invention as "a system and business model for allowing tourists access to a variety of attractions."  Further, the claims were found to be directed to solving the business problem of calculating aggregated compensation based on actual use, as recited in the claims.

    The Board thus agreed with Petitioner's analysis demonstrating that the claims address a business problem of calculating compensation and apply standard known computer components to achieve this business goal.

    Thus, the exclusion for "technological inventions" was not found to apply here.  Thus, the '128 patent was found to be a CBM eligible patent for review.

    Subject Matter Eligibility Under 35 U.S.C. § 101

    Now that the '128 patent was found to be eligible for CBM review, the Petitioner still has to establish that the claims are more likely than not invalid for the CBM trial to be instituted.

    The Petition challenged the '128 patent claims as directed to unpatentable subject matter under 35 U.S.C. § 101.

    The Board followed the two-step framework set forth by the Supreme Court for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.

    In the first step, the Board determines whether the claims at issue are directed to an abstract idea.

    The alleged abstract idea was that the claims are directed to calculating aggregated compensation for attractions based on actual usage (over some period of time, but not at the actual time of use).  The Petitioner asserted that using a card to access an attraction and calculating aggregated compensation based on actual use of the attraction have been disclosed in the prior art.  The Petitioner referred to prosecution of the application for the '128 patent, in which the applicant specifically distinguished the claims over prior art based on calculating "aggregate compensation  . . . wherein the controller does not compensate the attractions based on the actual use of the reward terminals at a time of the actual use of the reward terminals via a card."

    The Board was persuaded by this reasoning.  This is a little confusing given that claims were found to be directed to an abstract idea simply because aspects of the claims were disclosed in the prior art.  Whether the claims recite "known" material should be addressed under novelty and obviousness — not as a threshold for determining whether the claims recite subject matter eligible for patenting.

    In any event, the Board turned to the second step, in which the Board considered the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.

    The Board found that the claim elements recite off-the-shelf general purpose computing tools such as terminals and card readers, smart card technology, servers, standard databases, and a controller.  Thus, the Board easily found that claims of the '128 Patent merely teaches using generic computers, and computer components, to perform generic functions that do not improve the functioning of the computing devices or network communications and are not used in an unconventional way.  As a result, the Board was persuaded that the claims do not recite an inventive concept.

    Thus, the Board determined that the Petitioner had made a sufficient showing that it is more likely than not to prevail on its challenge under 35 U.S.C. § 101 to at least one of the '128 patent claims.  As a result, the CBM trial was instituted.

    Not a surprising result from the Board here, but another example of mixing analysis of patentable subject matter with novelty/obviousness, which is seen quite often for software patents these days.

    Before Administrative Patent Judges Thomas L. Giannetti, Rama G. Elluru, and Christopher M. Kaiser
    Decision by Administrative Patent Judge Thomas L. Giannetti

  • Patent Trolls Beware! — Supreme Court to Review Patent Venue Statute

    By Andrew Williams —

    Supreme Court Building #3In the past few years, the Supreme Court has been single-handedly tackling the so-called Patent Troll problem.  Sure, in that time, the President and Congress have made Patent Trolls a focus of their agendas, and have proposed many initiatives or legislative solutions to address the perceived problem.  And the mainstream media has certainly been reporting on the evils of the current patent systems, from the NPR "This American Life" and "Planet Money" podcasts (see "When NPR Podcasters Hit the Patent System"), to John Oliver's HBO commentary/comedy show "Last Week Tonight".  But only the Supreme Court has been effecting change that strikes at the heart of Patent Trolls — from Octane Fitness v. ICON Health & Fitness, which made it easier for district courts to award attorney fees, to Nautilus, Inc. v. Biosig Instruments, Inc., which made it easier for district courts to invalidate claims based on vague claim language, with many other decisions in between that expanded the meaning of patent ineligible subject matter.  To cap it off, earlier today, the Supreme Court granted a petition for writ of certiorari in a case that could have a significant impact on the ability of so-called patent trolls to take advantage of patent-friendly courts, such as the Eastern District of Texas — TC Heartland LLC v. Kraft Foods Group Brands LLC.

    This case involves the interpretation of the current venue statute.  At the time, we reported on the Federal Circuit's decision that denied a writ of mandamus to TC Heartland.  That case stemmed from a lawsuit brought by Kraft against TC Heartland and Heartland Packaging Corp. in the U.S. District Court for the District of Delaware.  TC Heartland is incorporated in Indiana, and has its headquarters in Carmel, Indiana.  Other than approximately 2% of its alleged infringing product ending up in Delaware, TC Heartland argued that it had no other contacts with that state.  As a result, it had moved the District Court to either dismiss the complaint for lack of personal jurisdiction, or to dismiss the action on venue grounds or transfer venue to the Southern District of Indiana.  Judge Stark denied that request.  TC Heartland followed that up with a petition to the Federal Circuit for a writ of mandamus to either dismiss or transfer the case.

    The issue essentially stemmed from a 1957 Supreme Court case, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), in which the Court held that the general venue statute does not override the specific patent statute.  The result was that a corporation could only be sued in the state in which it was incorporated.  The specific venue statute for patent litigation was (and is) 28 U.S.C. § 1400(b):

    Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.

    28 U.S.C. § 1400(b).  The general venue statute, in turn, specified that:

    (c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.

    28 U.S.C. § 1391(c) (1952).  However, in 1988, Congress amended 28 U.S.C. § 1391 to be more definitional:

    (c) For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.

    28 U.S.C. § 1391(c) (1988).  Moreover, Congress again amended the statute by passing the Federal Courts Jurisdiction and Venue Clarification Act of 2011, making two changes, including expanding the applicability of the new definition to:  "all venue purposes."  By changing the § 1391(c) to a definition of "reside" for the purposes of venue, it was argued that Congress meant to expand the reach of patent venue statute.  The Federal Circuit agreed with this position in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990).  This ultimate result was that any forum was available for a patent infringement action, provided that the district court had personal jurisdiction over the defendant.

    Interestingly, even though the TC Heartland case could impact so-called patent trolls and litigation in the Eastern District of Texas, it involves neither.  Both parties in the case are practicing entities, and the case was filed in the District Court of Delaware.  Nevertheless, it is pretty clear that certiorari was granted because of concerns about trolls.  TC Heartland's brief highlighted all of the harm that has resulted from the Federal Circuit's interpretation of the statute.  For example, it included a pie chart of the impact of forum shopping in 2015, which showed that more than 43% of patent infringement cases were filed in the Texas court:

    ChartIn addition, it included citations to numerous law review articles that allegedly demonstrated the "pervasive dissatisfaction with the Federal Circuit's broad patent venue" rulings, which was to blame for the success of the so-called trolls.  Finally, TC Heartland's brief included a 2016 ABA Resolution that supported an interpretation of the patent venue statute that would limit the definition of "reside."  Moreover, six amicus briefs were filed, all in support of granting petition for certiorari.  Not only did these briefs complain about the patent troll problem that allegedly stemmed from the Federal Circuit's interpretation of the statute, but one was filed by known anti-patent troll advocacy group The Electronic Frontier Foundation.

    Kraft, for its part, did not deny the potential patent troll implications of the case.  Instead, it pointed out that even if the goal of combating trolls was lofty, this case was not the way to do it:

    Petitioner and the amici describe at length concerns with forum shopping in patent cases, primarily the disproportionate number of cases brought in the Eastern District of Texas, often by patent-assertion entities.  Respondent does not dispute the existence of patent venue shopping.  However, the task of patent venue reform lies squarely with Congress.  The judiciary's role is to enforce the straightforward statutory framework currently in place, and the Federal Circuit's decisions challenged here are scrupulously faithful to that framework.

    Brief in Opposition, page 1.  Moreover, Kraft argued that this was a poor vehicle to address the issue because it was set to go to trial in January 2017.  Even if the Supreme Court sides with TC Heartland, it probably won't make a difference.

    Without knowing what the parties will argue in their substantive briefs, one thing is clear:  the Supreme Court usually does not grant certiorari in cases it intends to affirm.  Therefore, it is possible that we will see a change in the environment that has given rise to the popularity of patent friendly jurisdictions.  If the Supreme Court does side with petitioner TC Heartland, so-called Patent Trolls will in most cases no longer be able to use the Eastern District of Texas as a tool for extorting settlements from accursed infringers.  Congress, for its part, has attempted to address the forum selection problem by, among other things, introducing the VENUE Act earlier this year.  It is possible that Congress will now postpone any further action until resolution of this Supreme Court case, a decision for which is expected by the of the term in June 2107.  We will continue to monitor the case as warranted.

  • Verint Systems Inc. v. Red Box Recorders Ltd. (S.D.N.Y. 2016)

    By Michael Borella —

    District Court for the Southern District of New YorkPlaintiff Verint asserted six patents against Red Box (U.S. Patent Nos. 7,774,854, 5,790,798, 6,510,220, RE43,324, RE43,386, and 8,189,763) in the District Court for the Southern District of New York.  Red Box rebutted, asserting that all claims were invalid under 35 U.S.C. § 101 due to being directed to patent-ineligible abstract ideas.

    The patents are generally directed to recording a telephone or Internet communication between parties.  Specific features claimed by the patents include identifying communication content to record, recording packets that make up the communication, protecting some of the recorded information from unauthorized access, monitoring of telephonic call-center transactions, and graphical user interfaces for monitoring voice communications and related events.

    While the language of the claims varies from patent to patent, the Court's reasoning for all six was similar.  Therefore, we focus on just one "representative" claim, claim 1 of the '854 patent:

    A method of protecting information provided to an agent via a communication network comprising:
        receiving, at a communication monitoring server, an interactive communication responsive to an agent request via a communication network, the communication including information that is to be protected;
        routing the communication to an agent;
        recording at least a portion of the communication;
        electronically identifying the information that is to be protected from the communication; and
        preventing unauthorized access to the information that is to be protected during replay of the portion of the communication.

    In the words of the Court, this claim is directed to recording a "telephone or computer communication containing information a party wishes to protect from further dissemination."  The claimed invention facilitates identifying the information to protect and "rendering it unintelligible to anyone without authorization to access that information."  Particularly, it involves a "monitoring system that receives information from a communications network and uses a set of rules that can be stored in a database and that control the start/stop/break functions of the recording device."  If the sensitive information is recorded, it may be obscured (e.g., encrypted) to prevent unauthorized access.

    A claimed invention is eligible for patenting under 35 U.S.C. § 101 if it meets the requirements of the two-step test set forth by the Supreme Court in Alice Corp. v. CLS Bank Int'l.  According to the test, one must first determine whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But generic computer implementation of an otherwise abstract process does not qualify as "significantly more."  A goal of this test is to prevent one from patenting judicial exclusions, and thereby preempting others from using these basic scientific tools.

    Applying this test, the Court observed that, during the step one analysis, "patent claims must be considered in light of the specification, based on whether their character as a whole is directed to excluded subject matter," and that the core question is whether the claims focus on a "specific asserted improvement in computer capabilities [or] on an abstract idea for which computers are invoked merely as a tool."  The Court further noted that, at step two, "[t]he proper question is therefore not whether the invention is novel or whether it would be obvious to someone skilled in the art, but whether the claims contain an inventive concept such that the invention does not claim an abstract idea."  Similar to the step one analysis, a claim purporting to "improve the functioning of [a] computer itself or effect an improvement in any other  technology or technical field [will] suffice under step two," as does a claim that involves "the non-conventional and non-generic arrangement of known, conventional [pieces]."

    In order to address these inquiries, this District Court has developed a list of questions relevant to the Alice analysis:

    (1) Is there an improvement recited?
    (2) Is there a benefit recited?
    (3) Is something new recited?
    (4) Does the patent have one or more particular applications?
    (5) What are the steps and limits to be followed in applying the invention?

    But prior to applying these factors to the claims under dispute, the Court telegraphed the outcome of the case.  Particularly, the Court opined that:

    [V]irtually any invention could be described as simply addressing that which others long ago addressed:  the Socratic method to  acquire information; quills, pens, typewriters, to create written text; corkscrews to open wine bottles; and clay jugs with covers to prevent spills.  This reductionist simplicity may obscure underlying complexity, and it may jeopardize the innovative improvements upon longstanding accomplishments that patents are intended to incent.  Patent law protects the builder of a better mousetrap, even if his or her invention could be described as, simply, a mousetrap—or as a "method to catch a mouse."

    Many recent motions seeking determinations of patent ineligibility suffer from such reductionist simplicity—from characterizing as simply a mousetrap that which is in fact a better mousetrap.  Courts faced with such motions must scrutinize reductive descriptions with great care.  It has also become increasingly common for litigants to pursue such judicial rulings, which can be as complex as Markman rulings but without a similar record.  Courts must therefore be alert to motions seeking factual determinations of what a claimed invention "is" when unaccompanied by the necessary submissions from those skilled in the art.

    In short, the current fad of ineligibility motions in patent cases has, in certain respects, gotten ahead of itself.  There are instances in which a patent—or a single claim—may truly be ineligible under 35 U.S.C. § 101.  But courts should make such determinations on a proper record and should not confuse such determinations with the inquiries properly made under §§ 102 or 103—the sections of the patent law governing novelty and obviousness.

    Relying on this strong language, the Court reviewed claim 1.  Red Box argued that this claim (and all other asserted claims) amounted to no more than "the abstract idea of processing (i.e., recording, monitoring, analyzing, and/or securing) data and information in telecommunications."  The Court rejected this characterization as an example of the improper reductionist practice described above.  Instead, the Court found that:

    It is more accurate to describe these claims as a method to contemporaneously and automatically record, screen, and protect sensitive information exchanged over an electronic network.  Access to such information may either be permitted for those with authorization, or there may be a deletion of the information that occurs in real time, thereby preventing access.  This [is] not an abstract concept.

    Thus, claim 1 passes muster under step one of Alice.  The Court went on to describe how it would meet the requirements of step two as well.  Putting that inquiry in context, the Court noted that:

    The difference between what the second step of Alice examines, and that which a court would examine in analyses under §§ 102 and/or 103, is that step two of Alice is limited to claimed benefits and improvements, versus true novelty or obviousness as measured against prior art.  These inquiries are no doubt closely related.  Certainly, if an invention passes a §§ 102 or 103 analysis, it should pass Alice step two.

    The specification describes a number of advantages that the claimed invention has over existing methods.  These include addressing both telephonic and computer communications, automated, triggered identification of sensitive information, and automatically starting and stopping the recording.  The Court found no factual basis to ignore the patent's contentions, and Verint also supplied an expert declaration to support its position.

    Therefore, the Court concluded that claim 1 of the '854 patent satisfied both steps of Alice, and was eligible under § 101.

    2016 has been an interesting year for patent eligibility, with the Federal Circuit introducing two clear lines of reasoning with which challenges to claims under § 101 can be rebutted.  This shift in the law has found its way to the district courts, as we are seeing more cases like this one — where a judge refuses to accept a 10,000 foot level description of an invention when making an eligibility determination.

    But one must wonder whether the Federal Circuit will eventually overturn such a case, adding more nuance to the landscape.  In this decision, the Court's statement that "if an invention passes a §§ 102 or 103 analysis, it should pass Alice step two" could be viewed as a misinterpretation of decisions such as Ultramercial v. Hulu, where claims were found to fail the second prong despite there being no §§ 102 or 103 invalidity arguments at issue.  Under the current law, a claim can be abstract even if it is novel and non-obvious, and these analyses are still intertwined to some extent.  This is the legacy of Mayo v. Prometheus, and may ultimately require clarification from the Supreme Court.

    Verint Systems Inc. v. Red Box Recorders Ltd. (S.D.N.Y. 2016)
    Opinion & Order by District Judge Katherine B. Forrest

  • Solicitor General Recommends that Supreme Court Grant Certiorari in Sandoz v. Amgen

    By Kevin E. Noonan —

    Supreme Court Building #1The Federal Circuit's decision in Amgen v. Sandoz, regarding litigation "under" (or at least based upon) the Biologics Price Control and Innovation Act (BPCIA), interpreted for the first time two provisions of the law.  The first was whether the requirement in the law that the biosimilar applicant (BA) disclose its biosimilar application (aBLA) and other information to the reference product sponsor (RPS) was mandatory (as it appeared by Congress' use of the term "shall" in that provision of the statute); it is not according to the Court's decision.  The second was whether the 180-day notice provisions of the statute permits a BA to give notice of commercial marketing prior to FDA approval of the aBLA; according to the Federal Circuit's decision the BA cannot provide such "early" notice.  Sandoz petitioned for certiorari (and Respondent Amgen conditionally cross-petitioned), and the Supreme Court asked the Solicitor General for the government's views on whether or not to grant cert.  Last week, Acting Solicitor General Ian Heath Gershengorn provided those views.

    The SG recommended that the Court grant both cert petitions, counseling that the Court should overturn the Federal Circuit's determination that a BA cannot provide notice of commercial marketing under the statute prior to FDA approval, but to affirm the Federal Circuit's decision that the disclosure provisions of the statute are not mandatory.  These recommendations are expressly policy-driven; the SG states that the reason the Court should hear the parties is based on the importance of biologic drugs and their cost:

    "[B]iologic medicines are among the most important pharmaceuticals available today" and "are also among the most expensive, with costs often exceeding tens of thousands of dollars per year," citing FTC, Follow-On Biologics Workshop, Tr. 8 (Feb. 4, 2014), http://www.ftc.gov/system/files/documents/public_events/171301/140204biologicstranscript.pdf (statement of FTC Chairwoman Edith Ramirez).  In 2013, biologics accounted for approximately $80 billion in spending in the United States, constituting approximately 25% of all pharmaceutical expenditures.  FTC, Public Workshop: Follow-On Biologics: Impact of Recent Legislative and Regulatory Naming Proposals on Competition, 78 Fed. Reg. 68,841 (Nov. 15, 2013).

    And as a matter of statutory interpretation, the SG's brief states that "[t]he BPCIA represents a carefully calibrated legislative effort to promote innovation and competition in this important field, and the questions presented address core questions governing how the BPCIA operates."

    The SG's brief sets out it conclusions succinctly:

    The court of appeals erred in interpreting Subsection (l)(8)(A) [the Notice provision], but it correctly construed Subsection (l)(2)(A) [the "patent dance" provision].  The proper interpretation of those provisions has a significant impact on the operation of the BPCIA and the ability of aBLA applicants promptly to bring their biosimilars to the public.  And because the provisions are integrally related, the Court should consider all of the questions presented together.  Both the certiorari petition and conditional cross-petition therefore should be granted.

    The SG's analysis is expressly textual (if not hypertextual).  The brief frames the notice provisions as a gatekeeper for initiation of a second round of patent infringement litigation, wherein said notice triggers the "stay" imposed on such litigation the SG says is part of the statutory scheme.  Specifically:

    The text and purpose of Section 262(l)(8)(A)'s notice provision and the BPCIA's broader statutory context demonstrate that the provision permits [but does not mandate] an applicant to give advance notice of the first commercial marketing of its biosimilar before FDA has licensed the biosimilar.

    The SG advocates that the statute provides that the RPS "may seek a preliminary injunction to enjoin such marketing '[a]fter receiving the notice * * * and before [the] date of the first commercial marketing,'" citing § 262(l)(8)(B).  In practice, however, should the BA (as Sandoz did in this case) give the required notice when the FDA accepts the aBLA for review, the RPS can either file suit (and seek a preliminary injunction immediately; as in this case, in the absence of anything other than the notice upon which to base its motion), or risk waiting for the FDA to approve the biosimilar (burdening the RPS with a surveillance responsibility not recited in the statute).

    The brief provides this basis for its reading of the statute:

    The timing of biosimilars' entry onto the market prohibits FDA from making its approval of an aBLA effective before 12 years after the reference product's first licensure.  . . .  Given the expressly granted exclusivity periods, it is particularly unlikely that Congress would have further delayed biosimilars' marketing in such an indirect manner.

    This passage illustrates the overarching concern expressed by the brief, that biosimilar market entry could be delayed even if there was no basis for a delay, i.e., that the RPS did not have a patent that would preclude market entry.

    The statute provides a balance, according to the SG's brief, between Round 1 litigation (as a consequence of the statute's provisions for aBLA filing as an artificial act of infringement), the timing and subject matter of which is controlled by the BA, and Round 2 litigation prompted by the notice of commercial marketing, which in the SG's view is under the RPS control.

    Importantly, not only does the SG argue that notice of commercial marketing can be given before FDA approval, but the brief argues that injunctive relief is not available as a remedy after such notice is given.  This is based on the principle that the right to an injunction must be conferred by statute, and the BPCIA does not do so (supposedly this proscription lies outside the scope of a preliminary injunction motion in the anticipated second round of litigation provided by the statute).

    This means the BA will be able to market immediately upon approval, and the only recourse for an RPS is to file suit and apply for a TRO — because unlike under the Hatch-Waxman Act there is no automatic stay upon filing suit under the provisions of the BPCIA.  Alternatively, if as in this case the notice is given at the same time that the FDA accepts the aBLA for review, the RPS would need to initiate both Phase 1 and Phase 2 of the litigation at the same time.

    With regard to the patent dance, the SG takes an interesting position:  the Federal Circuit construed the statute incorrectly, but arrived at the correct conclusion:

    The government agrees that the Federal Circuit misconceived the relevant inquiry [concerning whether the disclosure provisions are mandatory].  But Section 262(l)(2)(A) may properly be understood as imposing a mandatory condition for invoking Subsection (l)'s patent-dispute framework without concluding that an injunction is available to compel compliance with that condition.  Even if the term 'shall' is understood as mandatory, the only consequences for failing to satisfy that condition are those expressly set forth by Congress in the BPCIA.  That conclusion flows logically from essentially the same reasons discussed . . . in connection with [notice provisions] Section 262(l)(8)(A).

    The SG also agrees with the Federal Circuit majority that the RPS has alternatives to protect its interests:

    And as petitioner explains, a [reference product] sponsor can, after conducting a diligent investigation, file an infringement suit as contemplated by the BPCIA based on any patent it reasonably believes has been infringed, and it may seek additional information regarding that patent claim through discovery.

    These recommendations are significant, because the Supreme Court asks the government for its views under those circumstances inter alia where there are important policy considerations at stake.  What these recommendations have in common is a reading of the statute that materially disadvantages the RPS in favor of the BA.  According to the government, the BA can "opt out" of the patent dance at any time, and the statutory remedy is immediate suit.  But depending on the timing of the BA's opt out, the RPS may have but a brief time to decide whether and where to bring suit, and on what basis.  At this stage of the process the balance of information is firmly in favor of the BA; the BA has all the information (from regulatory filings and patent disclosures) the RPS may use against her.  On the other hand, the RPS may know little about how the BA will produce its biosimilar and the similarities and differences (structural, pharmacological, etc.) between the biosimilar and the reference product, considerations important in making these decisions regarding suit against the BA.

    Deciding the questions before it as the SG recommends, the Supreme Court can permanently enshrine these disparities into the law (unless and until Congress intervenes, if it deigns to do so).  While this may promote cheaper biosimilar drugs in the near term, an overemphasis on cost to the detriment of development may have unintended consequences.  Principal among these is that these drugs may be produced elsewhere in countries having different drug development dynamics than in this country.  (Europe's reticence to provide patent protection for biotechnology for almost twenty years left the field clear for U.S. biotechnology companies to prosper without European company competition.)  But this eventuality doesn't mean biologic drugs will be cheaper in the U.S. (the "Congressional intent" expressly relied upon in the SG's brief).  Such countries, having a deep reservoir of internal and international demand will be able to charge what the traffic will bear in the U.S., particularly if these misguided policies have driven U.S. producers from the market (compare for example the consumer electronic industries in the 1980's; with American companies like Philips, and RCA, and GE having been driven out of the market by cheap foreign competition, new technologies were initially controlled by Sony, and Mitsubishi, and Samsung).  None of these outcomes is beneficial to keeping the American status quo, much less making it great.  And while it is unlikely to be the case that Congress intended to shift the balance against RPS's to this degree, if the Court takes the government's recommendations it may take the eventuality that the country suffers the consequences set forth above for Congress to realize that the golden-egged goose has been well and thoroughly cooked.

  • NRT Technology Corp. v. Everi Payments, Inc. (PTAB 2016)

    Second CBM Petition Denied As "Second Bite at the Apple"

    By Joseph Herndon —

    USPTO SealThe U.S. Patent and Trademark Office Patent Trial and Appeal Board issued a decision denying institution of a covered business method (CBM) patent review in a case caption NRT Technology Corp. v. Everi Payments Inc.  NRT originally filed a Petition, which was denied, and then filed this subsequent Petition requesting a review under the transitional program for covered business method patents of U.S. Patent No. 6,081,792.  The '792 Patent clearly qualifies as a CBM patent, but the original Petition was found lacking in substance to persuade the Board that the claims were more likely than not invalid.  The Board found this subsequent Petition to present substantially the same prior art and arguments previously presented to the Board in the prior Petition, and thus, this instant Petition was also denied.

    The '792 Patent

    The '792 Patent relates to a modified automated teller machine (ATM) or terminal that allows a customer to obtain cash from an account via various processes such as an ATM process or a point-of-sale (POS) process using both debit cards and credit cards.  The '792 Patent notes two problems associated with obtaining cash from prior art ATMs (i.e., via an ATM network).  First, with respect to using a debit/ATM card, a bank will typically impose a daily limit on ATM cash withdrawals.  Second, with respect to using a credit card to obtain cash from an ATM, people often do not know the personal identification number (PIN) that is required because they may not regularly use a credit card for that purpose.

    According to the '792 Patent, neither of these problems is encountered when using the same cards to make purchases, which occur over a POS network, not an ATM network.  With respect to debit/ATM cards, one can reach his ATM limit and not be able to obtain more cash that day from an ATM, but will still be able to purchase goods and services via a point-of-sale transaction because of the distinct and separate limit for point-of-sale transactions.  With respect to credit cards, PINs are not typically required to make purchases (which is why people often cannot recall their PINs).

    The '792 Patent describes and claims methods of using a modified ATM or terminal that can access a bank via both an ATM network and a POS network.  The method includes a cardholder first attempting to obtain money via a first type of transaction (i.e., conducted over an ATM network) and failing because he has exceeded his ATM daily limit or he cannot remember the PIN for his credit card and subsequently successfully obtaining money via a second type of transaction (i.e., conducted via a POS network).

    The cardholder does not obtain cash (or other valuable item) directly from the terminal when using the POS network.  Instead, the terminal informs a nearby money location (such as customer service windows at stores) of the approved transaction.  The terminal may also issue a "script" or "pre-receipt" for the cardholder to take to the money location.  At the money location, the cardholder obtains the transacted for cash or other item of value, preferably upon presentation of his identification.

    Claim 1 is illustrative and is reproduced below.

    1.  A method of providing money or an item of value to an account-holder, the method comprising:
        identifying an account to a terminal;
        entering a personal identification number into the terminal;
        requesting money or an item of value based upon the account via a first type of transaction;
        forwarding the first type of transaction to a processor;
        forwarding the first type of transaction from the processor to a first network;
        forwarding the first type of transaction from the first network to a bank;
        making a denial of the first type of transaction due to exceeded pre-set limit;
        forwarding the denial to the processor;
        notifying the account-holder at the terminal of the denial of the first type of transaction, and asking the account holder if they would like to request the money or item of value via a second type of transaction;
        requesting money or an item of value based upon the account via a second type of transaction;
        forwarding the second type of transaction to the processor;
        forwarding the second type of transaction from the processor to a second network;
        forwarding the second type of transaction from the second network to the bank;
        making an approval of the second type of transaction;
        forwarding the approval to the processor; and
        instructing a money location separate from the terminal to provide money or an item of value to the accountholder.

    Second Petition

    As an initial matter, this is a second Petition filed by the Petitioner, and the Patent Owner argued that the Board should deny this second Petition because it presents substantially the same prior art and arguments previously presented to the Board in the original Petition, which was also denied.

    The Board noted that institution of CBM patent review is subject to the Board's discretion.  In determining whether to institute a CBM, the Board may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.  Here, the Board determined that the grounds at issue rely on the same or substantially the same prior art and arguments that were found insufficient in a prior proceeding.

    With respect to the prior art grounds asserted in the second Petition, the Board previously considered the cited reference.  As such, the new combinations proffered in the second Petition could have been properly presented in the original petition.  Similarly, the Board previously considered Petitioner's prior proposed express constructions, and determined that they already considered substantially the same arguments and evidence presented in the prior petition.  Consequently, the Board found this second Petition to be a "second bite at the apple" used to bolster previously unsuccessful arguments.

    Although the second Petition does cite a new declaration and "new" prior art references, notwithstanding, the addition of any "new" element added to a previously presented argument did not deprive the Board of discretion under § 325(d).  The statute provides that the Board must consider whether "the same or substantially the same prior art or arguments previously were presented to the Office."

    The Board noted that there is no requirement of identity of either prior art or arguments, and therefore, a scintilla of difference or an immaterial difference does not create necessarily "different" arguments.  The Board was thus persuaded by the Patent Owner's arguments that the proposed grounds proffered in the instant Petition involve evidence and arguments previously considered in the prior proceeding and were substantially the same as those previously presented.  Accordingly, the Board exercised its discretion under § 325(d) to deny the instant Petition and not institute a CBM patent review of the '792 Patent.

    Before Administrative Patent Judges Kevin F. Turner, Miriam L. Quinn, and Jeffrey W. Abraham
    Decision by Administrative Patent Judge Kevin F. Turner

  • Conference & CLE Calendar

    CalendarDecember 13, 2016 – "Nuts & Bolts of the Federal Circuit's Rules" (Federal Circuit Bar Association) -  1:30 to 2:30 pm (EST)

    December 13, 2016 – "Patent Infringement: Structuring Opinions of Counsel — Leveraging Opinion Letters to Reduce the Risks of Liability and Enhanced Damages" (Strafford) – 1:00 to 2:30 pm (EST)

    December 14, 2016 – "Defend Trade Secrets Act: Litigation Strategy" (Federal Circuit Bar Association) – Washington, DC

    December 15, 2016 – "Risky Interactions: Using Multiple USPTO Post-Grant Proceedings Concurrently and Sequentially" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    December 15, 2016 – "Protect Your University's Patents while Avoiding 'Troll' Allegations" (Technology Transfer Tactics) – 1:00 to 2:00 pm (Eastern)

    December 20, 2016 – "Demonstrating Patent Eligibility Post-Alice: Impact of McRo and Other Recent Cases — Navigating the Nuances and Leveraging Guidance From Federal Circuit and PTAB Opinion" (Strafford) – 1:00 to 2:30 pm (EST)

    January 18, 2017 – "Top Patent Law Stories of 2016" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    ***Patent Docs is a media partner of this conference or CLE

  • IPO Webinar on Concurrent and Sequential Post-Grant Proceedings

    IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Risky Interactions: Using Multiple USPTO Post-Grant Proceedings Concurrently and Sequentially" on December 15, 2016 from 2:00 to 3:00 pm (ET). David Cavanaugh of Wilmer Cutler Pickering Hale & Dorr LLP, Kevin Greenleaf of Dentons LLP; and Matthew Kelly of CME Group will provide tips on:

    • Parallel reexaminations and IPRs, from both the patent owner and petitioner view;
    • Certificates of correction;
    • Parallel reissues;
    • Continuations;
    • Handling multiple IPRs on the same patent; and
    • Patent owner estoppel following an adverse judgment.

    The registration fee for the webinar is $135 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

  • Webinar on Protecting University Patents

    Technology Transfer Tactics will be offering a webinar on "Protect Your University's Patents while Avoiding 'Troll' Allegations" on December 15, 2016 from 1:00 to 2:00 pm (Eastern).  Mary Anthony Marchant of Morris, Manning and Martin, LLP will help attendees identify when to assert university IP rights, and how to do it in a way that staves off bad PR related to misconceptions of troll-like behaviors.  The webinar will cover the following topics:

    • Defining the differences between trolls and universities as NPEs
        – Federal Trade Commission’s Patent Assertion Entity activity
        – Government Accountability Office Report to Congressional Committees on factors that affect patent infringement litigation
    • Key Issues for the university and TTO to consider, including:
        – Public relations with faculty, administration, alumni
        – Protecting university technology and sending a message to potential infringers
        – Public institutions as good stewards of taxpayer funds
    • Proactive PR best practices
        – with faculty and other internal stakeholders
        – with the court of public opinion
    • Examples of positively and negatively viewed suits from several universities, including:
        – RPI v. Apple
        – Harvard v. Micron and Global Foundries
        – Carnegie Mellon v. Marvell
        – WARF v. Apple

    The registration fee for the webinar is $197.  Those interested in registering for the webinar, can do so here.

    Technology Transfer Tactics

  • FCBA Webast on Federal Circuit’s Rules

    Federal Circuit Bar AssociationThe Federal Circuit Bar Association (FCBA) will be offering a webcast entitled "Nuts & Bolts of the Federal Circuit's Rules" on December 13, 2016 from 1:30 to 2:30 pm (EST) at the FCBA Office in Washington, DC. Laura A. Lydigsen of Brinks Gilson & Lione will moderate a panel consisting of Peter R. Marksteiner, Circuit Executive and Clerk of Court for the Federal Circuit; Mona Harrington, Chief Deputy Clerk of Court and Director of Information Technology for the Federal Circuit; and Anne Toulouse, Deputy Director of Information Technology and Systems Administrator for the Federal Circuit. The panel will provide guidance on how to comply with recent amendments to the Federal Circuit's rules, proper use of the ECF system, reasons filings are rejected, and interaction with the Clerk's Office.

    Additional information regarding the webcast can be found here.

  • FCBA Webast on Defend Trade Secrets Act and EU Directive 2016/943

    Federal Circuit Bar AssociationThe Federal Circuit Bar Association (FCBA) will be offering a program entitled "Defend Trade Secrets Act: Litigation Strategy" on December 14, 2016 from 1:00 to 2:00 pm (EST) at the FCBA Office in Washington, DC. Jack Russo of Computerlaw Group, LLP will moderate a panel consisting of David Vance Lucas of Bradley Arrant Boult Cummings, LLP, and Leigh C. Taggart of Honigman Miller Schartz and Cohn. The panel will compare the U.S. Defend Trade Secrets Act (DTSA) and EU Directive 2016/943 (EU 943) and discuss the common enforceability of trade secrets in the U.S. and Europe, and resulting need for companies engaged in cross-border business to harmonize operational practices and multijurisdictional litigation strategies.

    Additional information regarding the webcast can be found here.